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Understanding Disability – Planning for Financial Well-Being

Understanding Disability – Planning for Financial Well-Being 1

Defining Disability

This morning as you drove into work you probably experienced some of the dangers caused by distracted drivers around you – Defining Disability1talking on cell phones,  texting, following too closely, or otherwise not following safe driving practices. Based on 2012 motor vehicle data from the U.S. Consumer Product Safety Commission and the Centers for Disease Control and Prevention (CDC), more than 2.5 million adult drivers and passengers were treated in emergency departments after being injured in a motor vehicle crash. Of those treated, over 164,000, or about 52 out of every 100,000 people in the country are hospitalized each year as a result of a serious injury. While this number has dropped dramatically over the last twenty years the cost of a serious injury continues to have a dramatic impact on families and on society as a whole. In 2003 the CDC determined the economic costs over a lifetime for an individual with a severe impairment to be approximately $1 million. Since that time, the cost of  health care has risen dramatically. These costs can have a devastating effect on a family.

Defining Disability
There are many definitions for the word “disability”, from restrictive definitions that allow access to certain services or government provided entitlements, to broad definitions that are more reflective of the impact that disability has on society. The United States Census Bureau uses a definition for disability that includes  impairments, activity limitations, and factors that restrict participation. Disability is categorized into three broad domains: communicative, mental and physical.
Significantly, 56.7 million people (18.7% of the population) were considered disabled in 2010, and of those about two-thirds (12.6% of the population) were considered severely disabled. This is a significant increase from only five years earlier.

Incidence of Disability Rises with Age

The Administration on Aging, a department of Health & Human Services, estimates that the U.S. population is aging quickly.

Understanding Disability – Planning for Financial Well-Being 2

People age 65 and over represented 12.4% of the population in 2000. By 2030, as much as 19% of the population will be age 65 and over. This represents a doubling of the senior population during this 30 year time span. With the population aging, the incidence of disability will rise substantially. The chart above from the United States Census Bureau shows how the prevalence of disability increases as the population ages. The most frequently cited contributing causes of disability as the population ages are loss of hearing, mobility and memory.

Wider Effects of Disability

Understanding Disability – Planning for Financial Well-Being 3Family Impacts:
• Reducing earning potential
• High costs of care
• Burdens of care on family members

Caregiver Impacts:
• Physical and mental health conditions
• Less opportunity to earn income
• Reduced contributions to savings
• Disruption to personal and family life
• Out-of-pocket expenses

Employer & Government Impacts:
• Absenteeism
• Lost productivity
• Reduced tax revenues

The Financial Impact of Disability

Understanding Disability – Planning for Financial Well-Being 4

Whether caused by accident or illness, disability can be financially catastrophic for a family. One notable statistic from the Social Security Administration estimates that just over 1 in 4 of today’s 20 year-olds will become disabled before the age of 67. Planning for the possibility of disability should be an important consideration in any financial plan; however many people are financially unprepared. As an example of the financial impact of disability, consider a couple whose financial plan is significantly impacted by a suddenly occurring disability that stops the husband from working at the age of 55. This would be a full 10 years before the couple’s planned retirement. The combination of reduced income and increased spending to deal with the disability can overturn a financial plan that had been on track to last until at least the age of 90 to one where all of the couple’s savings would be exhausted by the age of 77. By comparison, if the couple had sufficient disability insurance coverage – through an employer plan or purchased personally – the financial damage could have been greatly reduced. The cost of a disability insurance policy varies widely depending on personal circumstances, age and the length of the elimination period chosen. A policy with a 90 day elimination period that would provide a monthly benefit of $3,000 may only cost about $85 per month, or about $1,000 per year.

Understanding Disability – Planning for Financial Well-Being 5Some options that make disability policies more valuable include:

  • Cost of living adjustments
  • Return of policy benefits

“Own Occupation” benefit rider (This option is recommended for professionals or skilled workers and protects against the loss of benefits in the event that the insured is able to return to any gainful occupation other than their chosen field.)

Adapting to Change
When an individual becomes disabled, everything in their life changes, not just for themselves,but for their families as well. Individuals with disabilities require assistance with the most basic tasks, be it from caregivers, family members or supportive friends. According to statistics published by the Family Caregiver Alliance, most caregivers care for a relative. Of the family members supported, about half of the caregivers provide support for parents, and about one-third care for their spouses. The most support is provided in the following areas:

Healthcare Support & Management
• Transportation to appointments
• Assistance in purchasing and managing medications
• Assistance in learning about and accessing available support services

Home Support & Maintenance
• Cooking
• Shopping
• Cleaning
• Running errands
• Helping with finances

Employer Responsibilities
Employers have important social and legal responsibilities that to accommodate both workers with disabilities and their employees who have responsibilities to care for loved ones with serious health concerns. Workers with a disability are more likely to have only part time work (33%) as compared to workers who have no disability (19%). Part-time employment reduces the income level that workers with a disability are able to earn. According to a 2012 report by the Bureau of Labor Statistics barriers to employment for persons with a disability include a lack of education or training, lack of transportation to the workplace, and the physical environment of the workplace. The cost of disability in the U.S. is considerable. For example, absenteeism to provide care for a disabled relative negatively impacts the American economy at a rate of 2.8 million workdays each year, costing employers more than $74 billion annually. These costs include decreased productivity and output, lost sales, and reduced customer service.

Understanding Disability – Planning for Financial Well-Being 6Dealing with the High Cost of Disability
The high cost of disability can be a large burden for many families. Fortunately there are a large number of programs, services and other opportunities available to help. Areas where help will be most beneficial include tax deductions, social benefits, financial support, and assistance with day-to-day living.

Private Business Offerings
In looking for assistance, individuals with disabilities and their caregivers look not only towards their governments, but also towards the businesses with which they interact on a regular basis. Businesses can make their premises easier to access through the use of ramps, powered doors, removal of physical obstacles that make visiting more challenging, and by offering better access to other consumer friendly interactive devices. Consumer friendly packaging and instructions that are easier to use by persons with disabilities is also important. The government supports businesses in helping make their workplaces accessible for clients and employees, through programs such as the Disability Access Credit which helps lower taxes for small businesseson eligible expenditures.

Government Service Offerings
Federal and state governments have a wide variety of programs in place to help individuals with disabilities with both their financial and service needs. Income support is provided in many ways by the government. These are some of the federal programs available to individuals with disabilities.

Social Security Disability Benefits:
These benefits are limited to individuals who cannot work because they have a medical condition that is expected to last for at least one year or result in death. Qualification also requires meeting the “recent work test” and a “duration of work” test. Partial disability and short-term disability situations are not covered under Social Security Disability Insurance. Benefit amounts are calculated using a complex formula that includes how much has been paid in Social Security taxes over a period of years. The average monthly benefit paid in 2013 was slightly over $1,000 per month. For these reasons personal disability insurance coverage is important, in order to make up for any gaps in coverage from the Social Security Disability Benefits.

Supplemental Security Income:
Payments under this program are made to people with low income who have limited resources, and are at least age 65 or are blind or have a disability. The basic federal amount of Supplemental Security Income is consistent nationwide, and many states add additional amounts to top up the benefit. For 2014, the monthly maximum federal amount is $721 for eligible individuals, and $1,082 for eligible individuals with an eligible spouse.

Veterans Assistance:
Understanding Disability – Planning for Financial Well-Being 7There are a number of programs available specifically for veterans which include: support from the Veterans Administration to pay for adaptive equipment, transportation, financial assistance and services for family caregivers, clothing allowances, and outreach to meet the employment needs of disabled veterans. Other Programs: Support for individuals with disabilities is also available to help meet many other needs including: education, training, career assistance, health and medical, counseling, taxes, housing and assistance with daily living.

Financial Tools
Both individuals with disabilities and their caregivers need to manage their financial well-being. Caregivers need to incorporate financial planning and many of financial tools listed below for the following reasons:
• To help improve their own financial situation, and to help offset the extra financial costs associated with being a caregiver
• To have plans in place to ensure care continues should they become unable to continue providing care

These tools, together with a well constructed financial plan, can provide the greatest financial benefit for both individuals with disabilities and their caregivers.

Special / Supplemental Needs Trusts
Special trusts can be set up to provide benefits for people with disabilities and at the same time protect the assets in the trust. Designing the trust to ensure that it is compliant with U.S. laws, the disabled beneficiary will still be able to receive government supported health and care benefits under their publically assisted programs such as Medicaid.

Wills and Powers of Attorney
Having a Will and effective powers of attorney are two critical components of an effective financial and estate plan. A Will can help to ensure that financial and personal assets are passed to the most appropriate people. Similarly, having a power of attorney in place will provide the authority for a trusted individual to act, should it become necessary, with respect to personal property. A separate power of attorney should also be created to deal with personal care needs and medical issues.
The person you chose to be your health care agent will have the authority to make life and death decisions on your behalf according the guidance you provide. The right time to make decisions Having Wills and powers of attorney in place is of significant importance when planning for possible incapacity highlighted in an April 2012 report titled “Estate planning in the 21st century: New considerations in a changing society” from the BMO Wealth Institute. The report highlights the importance of  estate planning; which includes considerations such as preparing powers of attorney, updating a Will, and ensuring that older relatives, especially those that depend on caregivers are provided for.

Insurance
Understanding Disability – Planning for Financial Well-Being 8Life insurance is a financial tool that can be used to improve a family’s financial well-being. This is especially the case when life insurance is in place to assist with the financial care of the disabled individual that they support or care for. Planning is key Putting in place both disability and critical illness insurances for the caregiver is a proactive planning step that will help to ease financial concerns in the event that changes in the health of the caregiver make it necessary.  Having these insurances in place is essential for the well being of the caregiver, but especially important in ensuring that financial resources are available for the well-being of the person with the disability should the caregiver become unable to continue providing care.

Designation of Beneficiaries on Retirement Plans
Designating a beneficiary of a retirement plan, such as an Individual Retirement Account (IRA) is an important financial planning tool to help minimize both income taxes and potentially probate costs. For instance, taxes on retirement accounts can be deferred if these are transferred upon death to a surviving spouse.

Conclusion
We believe proactive planning and professional advice go hand in hand. By working with a BMO financial professional who understands the importance of planning for individuals with disabilities, their caregivers and their families, Americans can develop a thoughtful financial plan and enjoy greater peace of mind.

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Trust matters more than ever in an uncertain world

Trust matters more than ever in an uncertain world 9

By Zac Cohen, COO, Trulioo

Trust in the time of COVID-19

Perhaps more than ever before, retail and investment banks the world over face a pivotal moment in their evolution, as banking transitions from a digital-first towards a digital-only landscape. The COVID-19 pandemic has put severe restrictions on traditional face-to-face or high street banking and forced sections of society that had previously been resistant to or unable to access digital banking to make the shift. This understandably brings with it significant anxiety and fear.

For an industry that has been striving to rebuild consumer confidence since the global financial crisis of 2008, COVID-19 presents a huge challenge. It needs to foster trust at a time when the world is facing unprecedented levels of uncertainty and stands on the brink of an even more severe global recession.

Without doubt, a thriving digital economy will be critical for the global economy to bounce back quickly and strongly from COVID-19. Therefore building online trust has become critical to our very future.

A billion reasons to protect customers

The global banking system processes more than a billion transactions every day, from transfers and domestic and international payments, to loan approvals and the creation of new accounts. And each one of these transactions represents an opportunity for some sort of financial crime, whether that’s money laundering, identity theft, bribery or the financing of terrorism.

The global pandemic has only served to accentuate this level of risk, with new threats emerging on the back of COVID-19, and bad actors looking to exploit new opportunities. In particular, online fraudsters are looking to target people who are using digital services for the first time as a result of the pandemic, often the most vulnerable groups in our society such as the elderly.

Research that we recently conducted in the UK and the U.S. found that concerns about online security are higher within financial services than in any other sector, with more than half of people (51%) reporting that they are ‘very concerned’ about identity theft when using financial services sites.

Crucially, 90% of people believe that banks have a responsibility to reduce cybercrime through whatever identity verification is necessary.

Building trust from day one

Of course, customers want online banking services to be responsive, intuitive and fast, but it’s important to recognise that, first and foremost, people want to know that their money and their personal data are safe.

Know Your Customer (KYC) and Anti-Money Laundering (AML) practices are now essential in enabling banks to not only identify each individual customer, but to build trust across the digital ecosystem more broadly.

Identity verification technology during the onboarding process enables a bank to demonstrate to its customers that it is taking their security seriously from the very outset of the relationship. First impressions count — more than three quarters (77%) of consumers claim that the account opening process can ‘make or break’ their relationship with a financial services brand.

Banks simply cannot afford anything other than optimal onboarding and identity verification – fail to deliver this and trust is immediately eroded and in many cases, the customer walks away.

On the other hand, where banks do succeed in demonstrating their commitment to security during these first engagements, delivering a fast, secure and seamless account creation process, they are able to develop a more meaningful relationship with their customers. As many as  84% of consumers report having greater trust in financial services brands that use real-time identity verification during the onboarding process and 71% are more likely to share more personal data.

A layered approach to identity verification

In order to provide first-class onboarding processes and establish trust at the outset of the customer journey, banks need to ensure they can deliver relevant and compliant identity checks for customers, dependent on their geography and the type of service or product that they are looking to access. They need to move beyond a ‘one size fits all approach’ to identity verification, which can lead to cumbersome or unnecessary checks on the one hand, and increased risk on the other.

This is why a digital identity network is so powerful. This is essentially a marketplace of hundreds of data sources, verification processes and tools that leverage network data intelligence to verify and authenticate identities online.

This marketplace approach lets businesses get a more holistic view of risk and then apply whichever verification layers are needed to provide assurance and build trust.

Zac Cohen

Zac Cohen

For example, a bank may only need to perform a basic KYC check when onboarding a customer with an established government ID number or driving license. If that same customer then wants to take out a loan, the bank would need to run other verification checks to create a higher level of assurance. And if the bank wants to onboard a customer whose only form of digital identity is a name tied to their mobile phone number, it would likewise build up assurance through multiple verification and authentication layers — for instance, ID document verification, which captures images from a person’s ID document and assesses its validity, combined with biometric authentication, which compares a selfie photo (taken and sent through the mobile phone) with the photo on an ID document.

With such a layered approach to identity verification, banks have complete flexibility and choice to apply the most appropriate identity checks at every stage of the customer journey, meaning that they can manage and optimise customer experience while minimising risk and ensuring compliance against a rapidly changing regulatory backdrop.

Building a global ecosystem of trust for the digital economy

To build and maintain online trust in such a complex and diverse environment is extremely challenging for banks.

Indeed, despite rapid digitisation across all sectors and regions, the internet continues to suffer from a lack of a critical identity layer that would solve many of these complex problems. While there are layers of protocols and methodologies for transporting data over networks, there is no protocol for transporting assurance. In online transactions, then, there is no standardized way to establish that an individual is who they say they are — the essence of identity.

Clearly this needs to change in order to drive trust, digital access and financial inclusion.

A digital identity network provides banks with the assurance they need in these turbulent times, protecting both themselves and their customers from fraud and delivering seamless customer experiences. In particular, it allows banks to enter new markets and reach new customers who have previously been marginalised or excluded from the digital economy, with confidence. In this way, digital identity can become a great equalizer, enabling more people to access and enjoy the benefits of a digital economy, built on trust.

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Workforce Diversity Matters To Our ESG Evaluation

Workforce Diversity Matters To Our ESG Evaluation 10

We believe the limited representation of Black voices in key decision-making processes prevents companies from reaping the benefits of a diverse workforce. It also exposes companies’ reputations to allegations of discrimination, as shown by recent calls on social media to boycott certain businesses after apparently racist behavior of employees were captured on video and shared. As such, we believe companies need to be deliberate in how they recruit, hire, and develop Black talent if they want to achieve a sustainable and diverse workforce, thereby improving ESG performance.

As part of our social assessment in the ESG Evaluation, we assess how effective a company is at developing a productive and inclusive workforce. Key indicators include employee retention and turnover rates, labor standards, pay, benefits, and rewards. We also assess whether fair labor standards are entrenched across the value chain. Moreover, we evaluate an entity’s preparedness to respond to long-term risks and opportunities, including from changing demographics and social patterns. We assess the extent to which decision-making demonstrates the company’s commitment to its long-term strategy and sustainability, as well as its success at building an inclusive workplace culture. These practices are particularly important given the presence of systemic racism, which continues to disadvantage Black people in corporate environments, particularly in the U.S.

U.S. workplaces have yet to achieve equal opportunity for people of different races, and policies have so far not fully addressed the widespread issue of racism. According to the Center of Public Integrity and the Washington Post, from 2010 to 2017, one million discrimination complaints were filed with the U.S. Equal Employment Office Commission. More than 30% of these cases related to racial discrimination.

Labour Market Outcomes Are Rooted In Systemic Racism

The Black community has long been subject to civil and human injustices that have contributed to a vicious cycle of low educational attainment, high unemployment, and concentrated poverty. This has made it difficult for Black people to enter the workforce, advance in higher wage work, and accumulate generational wealth. Poverty serves as a systemic hurdle to Black employees because it creates barriers to higher educational attainment, thereby limiting their ability to procure employment and financial opportunities that would enable wealth accumulation. In 2018, the Kaiser Family Foundation revealed that Black Americans have the second-highest poverty rate in the U.S. (after Native Americans, another highly marginalized group). The study also highlighted a striking wealth disparity; while the median net worth of a white household in 2016 was $103,000, for Black households it was only $9,200 (see chart 1).

Chart 1

Workforce Diversity Matters To Our ESG Evaluation 11

Yet, structural hurdles and enduring biases have also historically disadvantaged Black jobseekers, regardless of educational attainment. In the U.S., only 31% of Black employees are in management or professional positions, and a low proportion is in upper management positions (see chart 2).

Chart 2

Black Employees are largely underrepresented in management and professional occupations
Educational attainment of the labor force, age and above in the U.S.

Workforce Diversity Matters To Our ESG Evaluation 12

What’s more, Black employees are often held to higher standards than their white counterparts. A 2015 study by the National Bureau of Economic Research found that Black workers receive extra scrutiny in the workplace, leading to lower wages, slower promotions, and sometimes even job loss. This legacy may also create an additional barrier to career advancement, which is apparent in the low proportion of Black employees in upper management positions. Of the Fortune 500 companies, Black employees only account for 3.2% of executive and senior management and only 0.8% of CEOs (four in total) are Black (see chart 3).

Chart 3

Diversity And Inclusion Policies Are Only The First Step

Workforce Diversity Matters To Our ESG Evaluation 13

In our opinion, D&I programs are an important mechanism for improving racial equity in the workplace. They aim to link a company’s strategies, mission, and business practices in a way that supports demographic differences among talent and enables an environment in which all employees are empowered to contribute their unique views and perspectives. As D&I programs have evolved, they’ve begun to encompass initiatives such as targeted recruitment, diversity education and training, career development, mentoring, and grievance procedures. Done well, D&I programs offer several business benefits, from improved productivity to innovation, which help boost a company’s ESG performance by helping it anticipate changing consumer preferences and consumption patterns.

Several studies have investigated the link between diverse workforces and a firm’s financial performance. According to a 2020 McKinsey & Co study, companies in the top quartile for racial and ethnic diversity are 36% more likely to show financial returns that exceed the national industry median. Another study by sociologist Cedric Herring, during his time at the University of Illinois, Chicago, found that companies with the highest racial diversity were able to generate nearly 15x more sales revenue than firms with the lowest levels of racial diversity. Herring suggests that racial diversity is the most important predictor of a company’s competitive positioning, and a better indicator of sales revenue and customer attainment than a company’s size, years in business, and overall employee headcount. Diversity has also been linked to increased innovation potential. Studies show that diversity supports, enhanced creativity, more informed decision-making, increased capacity for innovation, improved customer acquisition, stronger revenue-generating potential, and better talent management.

Analyzing Diversity Remains A Challenge

Where available, we analyze a company’s ethnic diversity metrics as one indicator for a diverse workforce. Businesses tend to focus mainly on the workforce composition and on recruiting employees from different identity groups, including race, gender, age, culture, cognition, and education. Social equality activists are increasingly demanding that companies release diversity statistics, thereby holding them accountable for persisting race gaps.

Although transparency practices are improving, the availability of data is a persistent issue. According to the U.K.’s Business in the Community (BITC) Race at Work 2018 Scorecard report, only 11% of employers report ethnicity and pay data. In France, a race-neutral policy approach to education and employment stands in contrast to that in other European countries. It is illegal for employers or institutions in France to ask about someone’s race or ethnicity. The intent of this was to avoid discrimination. However, in 2006, more than 25 years after the 1978 law prohibiting the collection of ethnic data, a poll by research company TNS-Sofres showed that more than half of France’s black adults said they had experienced racial discrimination. Furthermore, companies more frequently report strictly on percentages of minority employees without commenting, directly or otherwise, on the positions they occupy. This can mask some disparities in terms of job level, promotions, or lack of diversity in certain roles.

We also take into consideration companies’ strategies to increase diversity including quotas, targets, or affirmative action policies. Over the past few years, several European countries have proposed or implemented diversity quotas for boards of companies, principally to increase female participation. The U.S. state of California followed suit in 2018, while legislation is pending in other states. Although still controversial, quotas have helped increase the number of women on boards. Similar policies on ethnic diversity are largely missing. In the U.K., the 2017 Parker Review set a voluntary target for FTSE100 boards to have at least one director from an ethnic minority group by 2021. The Review’s 2020 update shows some progress but not full compliance with the recommendations.

Regardless of the approach a company takes to increase workforce diversity, it is clear that quality data is a necessary ingredient of an effective diversity strategy. As such, we believe transparency at all levels of the organization is imperative for companies to solidify the trust and loyalty of their employees, suppliers, and shareholders. In turn, this will help boost productivity and strengthen the potential for innovation, thereby supporting ESG performance.

The Emphasis Must Be On Inclusion

Recruiting ethnic minorities does not necessarily translate into an environment that’s free of discrimination, allowing each employee an equal opportunity to advance. In our opinion, employers with a culture that tolerates discriminatory practices and microaggression are vulnerable to productivity lapses, decreased innovation, and lower creativity. Therefore, we believe the success of D&I initiatives appears to hinge on the inclusion side of the equation, which should ensure employees feel their contributions are appreciated and full participation is encouraged. According to author and inclusion strategist Verna Myers, Vice President of Inclusion Strategy at

Netflix, “Diversity is about being invited to the party. Inclusion is about being asked to dance.” Analyzing inclusion practices could provide better insight into how companies manage more covert forms of discrimination associated with microaggression. In a U.S. national survey of over 3,700 office workers conducted by the National Opinion Research Center (NORC), 58% of black respondents said they have encountered racism at the workplace. According to the NORC, workplace prejudice often shows up in subtle ways, through microaggression, typically during employee interactions through comments that proliferate Black stereotypes. Examples include referring to Black employees as intimidating, or unprofessional because of their hairstyles, thus creating a situation in which these employees are perceived as “not right” for the job. Such a toxic environment can go undetected by senior management, particularly when people of color are underrepresented at the workplace and in management positions. Many instances of discrimination also likely go unreported, making it even more difficult to expose covert forms of racism in corporate culture. In some cases, microaggression could ultimately result in higher staff turnover rates, one of the factors that informs a company’s Social Profile in our ESG Evaluation.

Many corporate leaders have committed additional resources to D&I programs in the wake of the Black Lives Matter protests. However, the success of these programs lies in how they resonate with employees. Literature on this topic suggests that achieving true inclusion requires a shift in the organizational culture to acknowledge the value of different backgrounds, expose conscious and unconscious biases, and create an atmosphere of respect and empathy. Managers, in particular, play a crucial role in employee development and are therefore important stakeholders in supporting racial inclusion. However, many are not necessarily inclined to reflect on or talk about racial discrimination, and without a business culture that fosters inclusion, meaningful change is unlikely to result.

Companies have started promoting conversations with Black employees to better understand their experiences, which we believe is a starting point. Ultimately, achieving a sustainable diverse workforce and addressing system racism will require continued leadership and accountability. A 2018 Boston Consulting Group study of more than 1,700 companies in eight countries, across different industries and sizes, found that five key factors help diversity to flourish:

  • Participative leadership: managers support employee contributions;
  • Strategic priority: top management and the CEO clearly demonstrate support for diversity; – Frequent communication: free and open communication is encouraged within teams;
  • Culture of openness to new ideas: employees feel that they can express their perspectives without fear of retaliation; and
  • Fair employment practices: employees with equal roles achieve equal pay, and companies enact robust anti-discrimination policies.

Looking To The Future

The Black Lives Matter movement has ignited a broader awareness of racism in society that has put the corporate sector in the spotlight. We believe companies’ diversity track records will be increasingly scrutinized, making a diverse and inclusive workforce a reputational imperative. In our view, more corporate entities will treat the challenge of workplace diversity as they would any other existential risk, and therefore gather the right information, including opting into voluntary diversity initiatives, to make the most informed choices.

A Call To Action: The Race At Work Charter

In collaboration with the U.K. government, the BITC established the 2018 Race at Work Charter detailing five actions all employers, regardless of sector, could undertake to further support diversity and inclusion. Since the Charter’s inception, more than 100 companies have added their signatures, including the National Grid, Goldman Sachs, and Deutsche Bank. By joining this initiative, companies are committing to taking meaningful action against discrimination in the workplace. The five actions are to:

  • Appoint an executive sponsor for race.
  • Report ethnicity data metrics and monitor progress.
  • Commit, at the Board level, to zero tolerance of harassment and bullying.
  • Clearly state that promoting equality in the workplace is the responsibility of all managers.
  • Take meaningful action to support the career progression of ethnic minorities.

The success of a company’s D&I efforts will be reflected in several indicators, including: the proportion of Black employees in the workforce overall, also in management and leadership positions; and the pay gap between employees in similar roles. Large, technologically advanced companies will likely be among the first to back their D&I commitments with meaningful targets and report regularly on progress. In the end, an effective, inclusive framework that supports long-lasting diversity and ESG goals depends on sound communication and ongoing commitment of employees at all levels of the organization.

Related Research

  • Environmental, Social, And Governance: Why Corporations’ Responses To George Floyd Protests Matter, July 23, 2020
  • The ESG Pulse: Social Factors Could Drive More Rating Actions As Health And Inequality Remain In Focus, July 16, 2020
  • Environmental, Social, And Governance Evaluation Analytical Approach, June 17, 2020
  • Environmental, Social, And Governance: How We Apply Our ESG Evaluation Analytical Approach: Part 2, June 17, 2020
  • How We Apply Our ESG Evaluation Analytical Approach: Part 2, June 17, 2020
  • People Power: COVID-19 Will Redefine Workforce Dynamics In The Post-Pandemic Era, June 4, 2020
  • The ESG Lens on COVID-19, Part 2: How Companies Deal with Disruption, April 28, 2020
  • COVID 19: A Test Of The Stakeholder Approach, April 21, 2020
  • The ESG Lens On COVID-19, Part 1, April 20, 2020
  • How To Navigate The ESG Risk Atlas, April 11, 2019
  • How We Apply Our ESG Evaluation Analytical Approach, April 10, 2019
  • The ESG Advantage: Exploring Links To Corporate Financial Performance, April 8, 2019

External Research

  • https://www.washingtonpost.com/graphics/2019/business/discrimination-complaint-outcomes/
  • https://www.mckinsey.com/featured-insights/diversity-and-inclusion/diversity-wins-how-inclusion-matters#
  • https://journals.sagepub.com/doi/abs/10.1177/000312240907400203
  • https://assets.ey.com/content/dam/ey-sites/ey-com/en_uk/news/2020/02/ey-parker-review-2017-report-final.pdf – https://assets.ey.com/content/dam/ey-sites/ey-com/en_uk/news/2020/02/ey-parker-review-2020-report-final.pdf
  • https://www.talentinnovation.org/_private/assets/BeingBlack-KeyFindings-CTI.pdf
  • https://www.bcg.com/publications/2018/how-diverse-leadership-teams-boost-innovation
  • https://www.bitc.org.uk/race-at-work-charter-signatories/
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What is loneliness and how can you manage it?

What is loneliness and how can you manage it? 14

By Iris Schaden Your Business and Personal Coach

A mere century ago, almost no one lived alone. Today, many do and it is not unusual. The recent lockdowns and isolation periods have amplified feelings of loneliness. But why do we feel lonely? Why do our bodies experience social pain? Learn about what we can do to improve our situation, prevent chronic loneliness and minimise the tremendous impact it has on our health.

Solitude and choosing to be alone can be bliss. Over the last sixty years the number of people living alone has increased in developed countries by more than 50 percent. In countries such as Denmark, Sweden and Switzerland, it is very common for people to live alone. But this does not translate into higher levels of selfreported loneliness. Many people have friends or family they can interact with on a regular basis.

However, it is important to recognise that this choice is different to loneliness, which can be a state of profound distress. Loneliness is a purely subjective and individual experience that can be felt by anyone, no matter their social, educational, gender or age demographic. Humankind are social creatures by nature – we struggle without it – and social connections are important to our health and emotional wellbeing.

Loneliness is a problem when we feel that no place is home; when we are in a group and we still feel social separation; when we spend time with our family but we feel like we don’t belong; or when we lose a relationship and struggle to adjust. It is a growing phenomenon in modern times, a by-product of our individualism, long-distance study and career opportunities or time-consuming work commitments.

The pandemic, with its required isolation and social distancing, has added additional stress to many households, but feelings of loneliness or adverse effects of social isolation are particularly prevalent in one-person households and young people aged 12–25. According to a study by VicHealth, even before COVID-19 young adults and adolescents reported high levels of loneliness, social isolation, social anxiety and depressive symptoms. Additionally, it is men who tend to report higher levels of loneliness than women.

Reported loneliness is on the rise. In 2017 and 2018 former US Surgeon General Vivek H. Murthy declared ‘an epidemic of loneliness,’ and the UK appointed a Minister of Loneliness. In these two countries, one in five adults reported that they often or always feel alone; in Australia, it was one in four adults. And this was before COVID-19, which makes us realise the mental and emotional impact lockdown has on individuals.

What happens to our bodies when we experience loneliness?

Neuroscientists, such as John Cacioppo, identify loneliness as ‘a state of hypervigilance whose origins lie among our primate ancestors and in our own hunter-gatherer past’. Our ancestors needed to belong to an intimate social group to survive. Cacioppo explains that our bodies respond to being alone, or being with strangers, as though we were in a dangerous situation.

Separation from other people (the group) triggers a fight-flight-or-freeze response and we feel social pain. While physical pain is primarily a sensory experience, social pain is the emotional state that comes from the distress of being lonely. Like the bodily sensation of hunger, it alerts us to a need, but instead of food the need is social interaction.

Loneliness generates anxiety: our breathing quickens, our heart races, our blood pressure rises and we struggle to sleep or sleep well. If we don’t pay attention, over time we start to act more fearful, defensive and self-involved. All of these actions drive others away and tend to stop those experiencing loneliness from doing what would benefit them the most: reaching out to others. It is a vicious cycle and one that is especially challenging for older and younger individuals.  

Tactics to help cope with feelings of loneliness. 

To belong is to feel at home in a place or situation where you feel included, comfortable and connected with others. In his assessment, Vivek H. Murthy wrote, ‘To be at home is to be known … You can feel at home with friends, or at work, or in a college dining hall, or at church, or in Yankee Stadium, or at your neighbourhood bar. Loneliness is the feeling that no place is home.’ Having relocated to different cities and countries and re-establishing my life over and over again, I can certainly say that loneliness can be a challenge.

Iris Schaden

Iris Schaden

How can we combat the feelings of loneliness and the anxiety that comes with it, before it becomes chronic and we find ourselves even more isolated over time? 

The first step in moving forward is acknowledging how you feel. Give those feelings a name with a specific timeframe; for example, today I feel alone or since I’ve been in lockdown, I have felt alone or since I lost my partner, I feel disconnected and lost. By doing this, we focus on the present and do not label our entire existence as lonely.

My personal strategy is to go outside if the loneliness gets too ‘heavy’; connect with other people through looks and smiles (even under a face mask our eyes can smile); call friends and family regularly; or schedule a brunch or glass of wine with friends (in person or video chat).

Practising random acts of kindness and gratitude, for others and ourselves, is another very effective and very positive way of bringing us back into the present moment and improving our overall wellbeing. Energy flows where our focus goes. It takes effort and sometimes it is indeed easier to just give in and watch a light-hearted movie on the couch. And that’s fine too!

If you are ever experiencing loneliness, I recommend exercising your social muscles and also seeking support. Remember that your feelings are normal as we are biologically fine-tuned to being with and interacting with others. However, you will need to make changes to avoid jeopardising your health. Once loneliness becomes chronic it becomes self-sustained and you will begin exhibiting defensive behaviour. As a defence mechanism, loneliness makes you assume the worst of others and you (your brain) become hypersensitive to social signals that might be interpreted as hostile towards you, when in reality people might just be trying to help you.

Large studies have shown that feeling lonely has a tremendous impact on your health: it can make you age quicker, cause dementia to advance faster, weaken your immune system and lead to anxiety and depression. Many people turn to substance abuse which only serves to numb the symptoms, rather than treat the source. And while you can find so much information online, knowing is not enough. Remember that reaching out for help is not a sign of weakness but one of strength. So please reach out to your network, talk to your health professional or get in contact with me.

There are different ways to improve your overall wellbeing. Let’s discuss.

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